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Common Mistakes Before Filing for Bankruptcy

If you are facing an insurmountable sum of debt that you have now realized you cannot begin to pay, you have probably reached the conclusion that it is time for you to consider your bankruptcy option. The process itself can be complex and will require legal help, but what many do not know is that you should begin seeking legal advice before you even begin to pursue this course of action. Many costly mistakes made before you file for bankruptcy, can detrimentally affect you, so make sure you are well informed before you begin your journey toward a clean slate.

Below is a list of some of the most common mistakes that are made prior to filing for bankruptcy that you must avoid:

  • Lying about assets: If you are opting for a Chapter 7 bankruptcy, you will be required to take what is known as the “means test,” during which it is mandatory for you to honestly disclose all of your assets and income. This step helps to determine if you have the capacity to pay off your creditors in a Chapter 13 repayment plan. If you knowingly omit assets or income to increase your chances of qualification, your case will inevitably be dismissed and you might possibly be banned from filing on those particular debts again. Keep in mind that no one is going to take your word on the state of your finances. A bankruptcy trustee is going to access your records and learn about your deception, so save yourself the trouble of enduring this and be open and honest.
  • Failing to consult an attorney: We seek professional help for just about every task we do, including filing our taxes or getting our car repaired, so why not obtain legal guidance for something as complex as bankruptcy law? Bankruptcy attorneys have the insight, knowledge, and experience that an average consumer lacks. Given that you are filing for bankruptcy, you are probably in financial trouble, so give yourself the best possible chance you can have at starting anew by consulting with a bankruptcy attorney.
  • Giving assets to family members: It might seem tempting to give away things like your property, cars, jewelry, electronics, or even cash to your friends or family to temporarily shield them, but this is dishonest and it is unlikely you will get away with it. In this day and age, everything leaves a paper trail, so never expect that you can successfully hide any assets.
  • Running up credit card debt: Any credit purchase that is made within 90 days of filing for bankruptcy may be excluded in your bankruptcy debts, which means you could potentially owe money on your credit cards even after the process of filing for bankruptcy is over. Not only that, but you could be accused of fraudulent borrowing. Be cautious and put your credit cards away once you decide to file for bankruptcy.
  • Raiding your retirement funds: If you are thinking about raiding your 401(k) or any other retirement account to pay off your creditors before filing for bankruptcy, now is the time to banish that thought. Paying some creditors and neglecting others is actually prohibited under the bankruptcy code since you would be favoring one over the other. Additionally, doing so would is probably not wise since your retirement accounts are exempt when you file for bankruptcy. This means you would be using money from accounts that were never in danger of being seized by a bankruptcy trustee or creditor. Sit tight and keep your hands off of those retirement assets.
  • Not doing any research: Not all debts are created equally. Your student loans and child support payments, for example, are not dischargeable, so make sure you understand the nature of your debts and whether or not a bankruptcy is the right course of action. This is another reason why you should seek the advice of a qualified bankruptcy attorney.

Bankruptcy Attorney in Bedford, Texas

It is not easy to come to the realization that you need to file for bankruptcy due to unmanageable debts, but sometimes it is necessary. Before you begin this process, turn to The Law Office of Mark B. French for the legal guidance you need to make the right decisions for your situation as you move forward. We will help set you on the right path toward rebuilding your financial health so you can have a better, brighter future.

Get started and contact us today at (817) 381-9855 to schedule a consultation with a knowledgeable bankruptcy attorney at our firm.

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